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New Healthcare research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWIRE) -- 08/05/2013 -- As we have previously highlighted, Venezuela's currency devaluation has an immediate negative impact on multinationals' local financial performance reported in repatriated currency terms. We believe that foreign drugmakers will suffer from increasing government intervention, which aims to address high inflation as a consequence of the devaluation.

Headline Expenditure Projections

- Pharmaceuticals: VEB43.5bn (US$10.1bn) in 2012 to VEB53.4bn (US$8.8bn) in 2013; +22.8% in local currency terms and -13.6% in US dollar terms. Forecast remains unchanged from Q213.
- Healthcare: VEB86.7bn (US$20.2bn) in 2012 to VEB106.6bn (US$17.5bn) in 2013; +22.9% in local currency terms and -13.5% in US dollar terms. Forecast up due to new historical data.

Risk/Reward Rating: Venezuela comes 11th in BMI's RRR matrix for Q213 in America, which ranks pharmaceutical markets according to their attractiveness to multinational drugmakers. We have re-weighted the RRR components to improve the tool, and adjusted scores for all markets in the Pharmaceuticals and Healthcare reports. Venezuela's pharmaceutical market is expected to grow at double-digit rates through to 2022 in local currency terms, largely due to inflation.

- In May 2013, the Pharmaceutical Research and Manufacturers of America (PhRMA) released its Special 301 Submission for 2013. The organisation opted to maintain Venezuela's recommended status as a Priority Watch country in its 2013 report submissions, indicating that there is a continued severe threat to pharmaceutical patents in the country.
- In May 2013, Freddy Ceballos, the president of the Pharmaceutical Federation of Venezuela, stated that access to foreign exchange is one of the issues that occur in the drug distribution process. The country also faces the issue of tariff codes that are harmonised with those of Mercosur, Ceballos said. The president also mentioned that no dollars are being liquidated and the debts of producers in the country with global suppliers are also very huge. Ceballos expects that Minister for Finance Nelson Merentes will take some initiative to solve the medicines distribution problem.
- In March 2013, Venezuela's National Statistics Institute (INE) released the country's pharmaceutical trade data for 2012, confirming that Cuba has become the leading medicine supplier for Venezuela.

BMI Political View: We believe recently elected President Nicolas Maduro will adopt the policy direction of his predecessor Hugo Chavez. This means the public sector will remain the main driver of the economy, and a significant opening up to foreign investment is unlikely. Moreover, there are significant risks that challenge Maduro's permanence in power, stemming both from the opposition and within his party. A coup cannot be ruled out given the high levels of social and political tension.

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